by Tom Foremski, “Intel’s Battle With ARM is About Making Its Future Fabs Viable

Question

by Tom Foremski, “Intel’s Battle With ARM is About Making Its Future Fabs Viable,” PC World, 24 September 2012. Available at: http://www.siliconvalleywatcher.com/mt/archives/2012/09/intels_battle_w.php

3.Now suppose that Intel receives the McKinsey report that you read for this case. Explain the decision criteria that would have to be true for you to recommend that Intel install the energy efficiency measures. Suppose you recommend that they do decide to install the energy saving equipment before their rivals. Show what happens to their cost curves for production and make a prediction about what you think will happen to profits.

Explanation / Answer

Solution:

The low power consumption of ARM processors give it a strategic advantage as they are ideally suitable for Notebooks , Smart phones , tablets and other hand held devices. The ARM processors are widely used in handhelds and other portable devices and the smartphone segment is the fastest growing segment in the mobile computing industry . The future outlook for mobile computing is growing at a fast rate the companies who are able to dominate the mobile processor segment can reap huge profits .Intel has to recognize this new opportunity if it aims to keep up its profitability and it is important for Intel to invest in energy saving devices for smart phones . This way Intel can maintain its leadership in semiconductor industry . The cost for incorporating energy saving devices will be high as the semiconductor industry is capital intensive . Complex manufacturing facilities have to installed and initially due to the high costs , the profits of intel will slide down . However , once it can make a sizeable breakthrough in being a trusted supplier of computer chips to mobile manufacturers , it can recover the costs and start reaping profits .

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